When a coalition led by the Congress Party came to power in India almost nine years ago, many were encouraged by the emergence of Manmohan Singh, an esteemed economist, as prime minister. His clean reputation led many to believe that he would usher in an era of political transparency. Yet, it hasn’t been that way. As the editor M.J. Akbar noted, “It does not matter if you are personally incorruptible; you have to be institutionally corrupt to engage in Indian politics.”

The ruling government has been pilloried for a series of huge scams – from the Commonwealth Games to the 2G spectrum case – that have collectively cost the exchequer up to $60 billion, by some accounts. Public outrage against political corruption is at an all-time high, with campaigners such as Arvind Kejriwal calling for harsh punishments for corrupt officials along with the establishment of an omnipotent ombudsman, or Lokpal. Others hark back to a cleaner era, and lament the declining moral caliber of India’s political class.

But, as Ashutosh Varshney of Brown University has reasoned, rapid growth in a largely poor, rural society is likely to be accompanied by rampant corruption. Drawing on precedents from 19th century America, the rise of South Korea under Park Chung-hee and modern day China, he argues that economic growth is a double-edged sword: while generating employment and expanding opportunity, it also creates ample room for graft.

When India’s freedom struggle was in dire need of funds, even Mahatma Gandhi allegedly had no qualms about soliciting contributions from nationalist business tycoons such as G.D. Birla. In return, while heroically protesting British policies, historians claim he also once went on hunger strike to compel the striking workers of a capitalist patron to return to their harsh working conditions. Since then, the sinister nexus between politics and business has only deepened.

After all, running for office in modern India is a costly affair and aspiring candidates need oversized pockets. On the campaign trail, someone has to foot the bill for the choppers and SUV convoys, the phalanx of support staff, the advertising blitzes and, yes, for the envelopes of currency and bottles of toddy that are doled out to voters before ferrying them to the local polling booths. In aggregate, with total electioneering costs for the 2014 elections in the world’s largest democracy potentially crossing $2 billion, the math only get murkier.

That’s where business houses and their coterie of lobbyists and fixers come in. They are happy to pony up the capital, but demand to be compensated after the elections. Soon, the financial compulsions of electoral politics straitjacket prudent political decision-making and policy is massaged for the benefit of patrons.

The reality is that most well-organized political outfits can manipulate the Election Commission’s stipulations of a maximum of 2.5 million rupees ($45,000) in spending per seat. With a scale of institutionalized corruption that benefits all involved, exposing a clutch of corrupt politicians, as is the wont of Mr. Kejriwal and his ilk, and expecting this to usher in a chastened era of financial probity is the stuff of Bollywood fantasy.

Tackling political corruption at its root must involve amending antiquated, and often absurd campaign finance laws, and forging an alternate source of electoral funding that is paid for by the taxpayer. In his brilliant essay “Funding Democracy,” Keerthik Sasidharan points to research from the University of Pennsylvania showing that electoral reforms typically arise following corruption scandals, mounting campaign costs and a lack of equal access to participate in the political process. “India is a case in point in all three,” he argues.

Mr. Sasidharan proposes collecting 1,000 rupees from each of India’s 40 million-odd taxpayers and launching a ring-fenced electoral fund. At their discretion, citizens could allocate an additional maximum of 5,000 rupees to a favored candidate. Under this system, the fund will slowly swell. Candidates can either opt for this public financing or forego it altogether, with their choice signaling who they may be more beholden to. “Taxpayers will deny funding to politicians who fail to deliver. Politicians, in turn, will crack down on the bureaucracy. It will be in every party’s self-interest to support a pro-growth agenda, championing taxable employment that will increase their own campaign funding,” he continues.

Of course, this approach ignores a key reality – changing the rules of the game so radically is unlikely to gather much support in the legislature, since it goes against the short-term interests of all major political parties. And organizing studies and committees will only help smother such proposals in official red-tape. However, it would be worth exploring to what extent a judicial directive or intervention can slowly bring such ideas to fruition.

Curbing the obscene level of political corruption in India will require bold, imaginative approaches such as this to address the nuances and realities of electoral financing, and the closely related issues of “black” money and the lack of internal democracy within India’s major political outfits.

Rakesh Mani is a columnist and writer, focused on Indian policy issues. He has previously worked with the Asian Development Bank, and is an alumnus of the Teach For India program. Follow him on Twitter: @rakeshmani.

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